The annual inflation rate remained unchanged at 2.2 per cent in May. Meanwhile, economists are predicting that the core inflation index, which dropped last month, will rise again quickly.

The unchanged Consumer Price Index (CPI) saw lower natural gas prices offset by higher homeowners' costs and gasoline prices.

The core inflation index, which excludes the eight most volatile items in the index, was also at 2.2 per cent -- a drop from April's 2.5 per cent rise. The index has remained above 2.0 per cent since July 2006.

The Bank of Canada (BoC) monitors the core index when considering interest rate changes. The bank, which has said inflation has been stronger than anticipated, prefers to see the number at 2 per cent.

Most economists are expecting that the current ease in inflation will not last very long.

"We should see the year-ago (core) pace back near 2.5 per cent next month," Mark Chandler, fixed income strategist at Royal Bank of Canada, said in a note. "The relatively firm inflation trends remain intact ... comfortably above the BoC's 2-per-cent inflation target and strong enough, we feel, to trigger a rate hike in July."

Mortgage interest cost rose 5.7 per cent in May compared to the same month last year.

Homeowners' replacement cost, which represents the worn-out structural portion of housing and is estimated using new housing prices (excluding land), increased by 6 per cent.

Along with homeowners' costs and gasoline, car insurance (3.7 per cent) and restaurant meal prices (3.7 per cent) also jumped in May. However, natural gas (8.8 per cent), computer (20 per cent) and video equipment (8.5 per cent) and vehicle purchase and lease costs (0.3 per cent) dropped.

Across the country, Albertans saw the highest price increases, paying 5 per cent more for goods and services in May.

Statistics Canada also announced that it has updated its basket of consumer goods and added some new items to better reflect changes in the spending patterns of Canadians.

The annual inflation rate in the provinces and territories. (Previous month in brackets):

  • Newfoundland and Labrador 0.7 (1.4)
  • Prince Edward Island 1.2 (1.4)
  • Nova Scotia 1.7 (1.4)
  • New Brunswick 1.4 (1.1)
  • Quebec 1.6 (1.4)
  • Ontario 1.9 (1.8)
  • Manitoba 2.3 (2.2)
  • Saskatchewan 2.7 (2.4)
  • Alberta 5.0 (5.5)
  • British Columbia 1.7 (1.9)
  • Whitehorse, Yukon 1.9 (1.7)
  • Yellowknife, N.W.T. 3.1 (2.3)
  • Iqaluit, Nunavut 3.1 (3.1)